Market Performance for December and 2018

2018 will come to be known as the year volatility returned to the stock market. Coming off a 25% gain in the Dow in 2017, it went into 2018 with a full head of steam. Then it hit that proverbial brick wall on 1/26, reaching it’s high of 26,617. From that lofty perch the Dow fell over the next 9 trading days to 23,860, a loss of 10.36%. That prompted several phone calls from concerned clients. The Dow wouldn’t break a new high until September, 20, when it finished at 26,657. That is also the day this Bull Market became the longest in history. The Dow reached its highest finish for the year on October 3rd, at 26,828. Remembering the market started the year at 24,719, the gain was 8.5% for the year on 10/3/18, at the beginning of what is usually a good three months for stocks. And over the next two months the Dow hovered in the 24000 – 25000 range. On December 3rd the Dow finished at 25,826 before falling 801 points the next day. Over the next 2 trading days the market fell another 639 points, finishing at 24,389 on Pearl Harbor Day. It bounced up and down over the next week before losing another 497 points a week later on the 14th to end the week at 24,101. Monday, the 17th opened up with another down day, losing another 508 points, then declining by another 1150 to end the Friday before Christmas at 22,445. Friday, the 21st, was also the day that saw the most trading volume we’d seen all year. Then our Christmas Eve lump of coal came in the form of the lowest finish for the year at 21,792. We have picked up about 1500 points since then, but the markets were still down for the year. From the high point on October 3rd to the low point on December 24th represented a loss of 18.77%. A loss of 20% is considered a bear market. However, a 20% loss needs to remain a 20% loss for several months for it to be considered a real Bear. Without considering the dividends, and finishing the year at 23,327, the Dow lost 5.63% in 2018. Considering the dividend payout, the Dow lost 3.15% in 2018. The S&P 500 lost 3.95%, the NASDAQ lost 2.85% and the Russell 2000 (small cap stocks) lost 10.77%. So none of the domestic indexes we follow had a positive year in 2018. One of the more optimistic reports we follow predicted the S&P 500 would end the year at 2850. It finished at 2507. They renewed the 2850 prediction for 2019. We also read some reports that predicted a stock market slaughter in 2018. That didn’t happen either. That’s the problem with predictions. They’re usually wrong. But somehow people still love to hear them and either be buoyed by the optimistic forecast or scared by the gloomy outlook. That’s why we shy away from predictions. Instead, we watch for trends to develop and try to take advantage of those trends